Japan Household Spending:

 https://mainichi.jp/english/articles/20210706/p2g/00m/0bu/033000c

Article:

TOKYO (Kyodo) -- Japan's household spending in May jumped 11.6 percent from a year earlier, following a sharp increase the previous month, as it continued to rebound from a slump last year caused by the coronavirus pandemic, government data showed Tuesday.

Average spending by households with two or more people in real terms stood at 281,063 yen ($2,500), the Ministry of Internal Affairs and Communications said. The year-on-year gain was the second-largest since comparable data became available in January 2001, following a 13.0 percent spike in April.

Spending expanded for the third month in a row, starting with a 6.2 percent rise in March.

Ideas:

it is estimated that consumer spending is 50 percent of Japan's GDP or gross domestic product. As such its a very important part of the economy.

In most advanced economies consume spending it the largest part of GPD, and as such the services sector could be considered very important in Japan.

But the Bank of Japan is always concerned that consumer spending is not at its potential or not what spending should be in Japan.

But of that might be the fact that Japan has an ageing population and or the population is ageing at a faster rate than births as Japan also has a low birth rate.

But some other reports have shown that the age group between the ages of 20 and 65 in Japan, spend as much or more than the same age groups in other advanced countries. 

The problem is those in the 65+ age groups are becoming larger and larger every year and those age groups tend to spend less than the younger age groups.

Consumer spending might be increasing but its not where it should be.

Article:

In May 2020, household spending plunged a record 16.2 percent due to the government's first state of emergency over the pandemic, declared the previous month for Tokyo and six other prefectures and later expanded nationwide.

Requesting people to stay at home and nonessential businesses to suspend operations, the measure dealt a heavy blow to consumption until it was fully lifted in late May last year.

On a seasonally-adjusted month-to-month basis, however, spending in the reporting month fell 2.1 percent from April for the first decline in four months.

Ideas:

Because the virus situation is not going away but is actually getting worse the potential for consumer spending to increase or get back to the pre-pandemic levels might not happen anytime soon.

However, consumers might be thinking several things; they are tired of the pandemic and have pandemic fatigue and will eventually decide to just get out and spend. Or they feel the vaccinations are increasing and the feel safer to get out and spend. And they've waited long enough and they just to be out and about.

The only problem is the virus situation has exploded again so consumer will need to re-think their plans to get out and about.

And of course now is the Obon season, which usually means vacations and travel. So time will tell as to what people are going to do this Obon season.

Article:

A ministry official told reporters the nation's third virus emergency, effective from late April through mid-June for Tokyo, is believed to have weighed on private consumption.

In addition, when compared with a pre-pandemic level of May 2019, the latest average spending figure dropped a real 6.5 percent, the official said, expressing the view that the pandemic continues to affect consumption.

By component, outlays on transportation and communication surged 23.5 percent from a year ago, the biggest contributor to the overall outcome, supported by brisk purchases of cars and mobile phones. Spending on culture and recreation soared 24.0 percent as more people took trips and went to entertainment facilities than last year.

Ideas:

Its important to remember that Japan is the 3rd largest economy in the world. Yes a decrease of 6.5 percent in consumer spending is not good, but that 6.5 percent is not a complete drop in consumer spending. So there was still a lot of consumer spending. 

Was the purchase of cars a delayed purchase because of the pandemic in the spring of 2020 or was it Japanese consumers just felt it was time to buy a new car. And the same with mobile phones. Were delayed purchases or consumer just deciding its the right time to buy.

The spending on entertainment and trips, for the most part, can only be put off so long, all things being equal, meaning if consumers have a chance they will travel, even if it only domestically.

Article:

Expenditure on housing rose 28.9 percent and that on clothing and shoes increased 13.0 percent, also in reaction to the previous year's plummets.

Meanwhile, utility costs dipped 2.4 percent due to the previous year's high temperatures that increased power demand, the official said. Spending on furniture and household items, which include sanitizers and wet wipes, shrank 2.6 percent.

The average monthly income of salaried households with at least two people in May was down a real 2.6 percent from a year ago to 489,019 yen, as last year's income was boosted by 100,000 yen per person cash handouts by the government to help households cope with the pandemic. It followed a 2.8 percent rise the previous month.

Household spending is a key indicator of private consumption, which accounts for more than half of Japan's gross domestic product.

Ideas:

Maybe again housing purchases or spending on housing might be a delayed purchase or consumer just thinking its now the right time to buy.

But clothing and shoes might be a little different. As consumers are spending more and more online, maybe they feel don't want to buy some clothes and shoes online and they need or want to see the products in person before they buy.

As such as they now feel more comfortable going back to the brick and mortar stores purchases or those products increased. 

Its not surprising that household salaries might have been down slightly, as many companies were reluctant to give any kind of golden week bonus if that is calculated in the salaries.

And maybe this year the Japanese government didn't give households a 100.000 yen per person cash handout.

So a key question is what about the households that are part of the services sector. How are they able to survive if the business they are involved in is not doing so good still.

Consumer spending is a large part of the Japanese economy. But if many households are part of the services sector, and if they are related to a business that is not doing too good in the services sector, then they might be reluctant to spend or they might delay their spending and or only spend on the very basic needed to survive.

So the Japanese government maybe needs to find ways to help the businesses and the families in the services sector, such as restaurants, hotels. etc. because if they don't then consumer spending in the economy is going to remain low or very stagnant and will not reach the level needed for the economy to grow.

But of course there might still be subsidies given to restaurants or other places, but because the pandemic has been going on for so long is it enough after 18 months.

Have a nice day and be safe!